Energy Conservation Standards forResidential Dishwashers, Dehumidifiers, and Cooking Productsand Commercial Clothes WashersCommercial Clothes Washer Supplemental Notice ofProposed Rulemaking (SNOPR)Public MeetingBuilding Technologies ProgramOffice of Energy Efficiency and Renewable EnergyU.S. Department of EnergyNovember 16, 2009http://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html2Purposes•To invite comment on the proposed energy conservation standard level TSL 3 for commercialclothes washers (CCWs);•To present methodologies andcharacterize resultsfor this rulemakinganalyses, includingupdates to the analyses presented in the Supplemental Notice of Proposed Rulemaking(SNOPR);•To discuss specific issuesrelated to each analysis;•To seek input from interestedparties on methodologies, assumptions, data sources, and resultsfrom the analyses; and•To describe the next steps.Comments from Participants•Participants are invited to provide summary comments or statements;•Participants are invited toraise additional issuesfor discussion today; and•SNOPR comment period closes December 9, 2009.Purpose of the Public Meeting andComments From ParticipantsOverview3Statutory Authority – the Energy Policy andConservation Act (EPCA) as amendedThe Energy Independence and Security Act of 2007 (EISA) amendedEPCA (42 U.S.C. 6295(g)(10),(cc)) to prescribe standards for dishwashersand dehumidifiers, so DOE is notproposing standards for theseproducts.DOE published a Final Rule addressing energy conservation standardsfor residential electric and gas kitchen ranges and ovens and microwaveovens on April 8, 2009. 74 FR 16040.The proposed notice addresses in part the requirements of section136(e) of the Energy Policy Act of 2005 (EPACT 2005), which amendedEPCA (42 U.S.C. 6313 (e)) to require DOE to publish a Final Ruleaddressing standards for CCWs by January 1, 2010.Overview4DOE Actions on Commercial Clothes WashersTest Procedures•Final Rule for CCWs, whichadopted the EPACT 2005 amendmentsto EPCA requiring thatCCWs be rated according to the residential clothes washertest procedure, published onOctober 18, 2005.70 FR 60407, 60416.Energy Conservation Standards•Notice of availability ofthe Framework Document publishedMarch 27, 2006. 71 FR 15059.•Advance Notice of Public Rulemaking (ANOPR) published November15, 2007. 72 FR64432.•Technical SupportDocument (TSD) posted on DOE website.•Notice of Public Rulemaking(NOPR) published October 17, 2008. 73FR 62034. (October2008 NOPR)•SNOPR published in the Federal Register November 9,2009. 74 FR 57738.– Issued by DOE on October 30, 2009.– Available to stakeholders for review approximately two weeks prior to the public meeting.•Final Rule scheduled for January 2010.Overview5Background and Purpose•The October 2008 NOPR proposed amended energy conservation standards for certainproducts and equipment, including commercial clothes washers.•That rulemaking published a final rule in March 2009, well ahead of the CCW statutorydeadline of January 1, 2010.•CCWs were not among the products covered inthe final rule because comments onthe accuracy of the stated max-tech efficiency level for top-loading CCWs led to:oThree sample max-tech top-loading unitsbeing tested, none of which achievedthe efficiency levels stated by the manufacturer; andoDOE fulfilling its obligationto develop an SNOPR based on the new informationsince the NOPR had proposed a TSL for top-loading CCWs at the max-tech level.•This SNOPR presents the revised analysis and proposes new standard levels forcomment.Overview6EPCA directs DOE to consider seven factors when settingenergy conservation standardsFactorAnalysis1. Economic impact on consumersand manufacturersLife-cycle cost analysisManufacturer impact analysis2. Lifetime operating cost savings Life-cycle cost analysis3. Total projected energy savings National impact analysis4. Impact on utility or performance Screening analysisEngineering analysis5. Impact of any lessening ofcompetitionManufacturer impact analysis6. Need for national energyconservationNational impact analysis7. Other factors the Secretaryconsiders relevantEnvironmental assessmentUtility impact analysisEmployment impact analysisOverviewSelection of Proposed StandardsDOE considered five trial standardlevels (TSLs), beginning with the mostefficient level (TSL 5) and worked down to a level where the benefits ofpotential standards outweighed the burdens.•DOE tentatively concludes thatat TSL 5 and TSL 4, thebenefits of energy savings,economic benefits, and emissions reductions would be outweighed by the potential fordisincentivizing consumers topurchase high-efficiency front-loading CCWs and the largecapital conversion costs thatcould result in a substantial reduction in manufacturers’ INPV.•DOE tentatively concludes that TSL 3 saves a significantamount of energy and istechnologically feasibleand economically justified.•At TSL 3, DOE tentatively concludes that the potential adverse impacts to one Low-VolumeManufacturer (LVM),and therefore the potential adverse impacts on CCW marketcompetition, would be minimized. DOE has also taken into consideration the Department ofJustice’s review of the standards proposedin the October 2008 NOPR. (Competitiveimpacts are discussed in moredetail in the Manufacturer Impact Analysis section of thispresentation).Proposed Standards78Proposed StandardsProposed Amended Energy Conservation Standards forCommercial Clothes Washers (TSL 3)Product ClassProposed Energy Conservation StandardsTop-Loading1.60 Modified Energy Factor/8.5 Water FactorFront-Loading2.00 Modified Energy Factor/5.5 Water FactorDOE invites comments on these newly proposed energyconservation standards. (This is identified as Issue #7 ofIssues on Which DOE Seeks Comment.)9Opening Remarks•At this time, DOE welcomes opening remarks from interested parties on theSNOPR for commercial clothes washers.Opening Remarks and Comments from InterestedParties on the Proposed Energy Conservation StandardsOpening Remarks and Comment10Summary of Issues on Which DOE Seeks Comment - SNOPR Issues #1-7Issues for Public Comment1.Whether the method of “loading” clothes washers, or any other characteristic commonlyassociated with traditional “top-loading” or “front-loading” clothes washers,are “features” withinthe meaning of 42 U.S.C. 6295(o)(4)in EPCA and whether the availability of such feature(s)would likely be affected byeliminating the separate classes for these equipment typespreviously established by DOE.*2.The revised efficiency levels, including therevised max-tech levelfor top-loading CCWs.3.Technological feasibility ofthe proposed max-techCCW, including washing and rinsingperformance measures for CCWs and population data for water heating CCWs.4.The determination of short- and long-run price elasticitiesof demand and cross priceelasticities for top-loadingvs. front-loading CCWs andused vs. front-loading CCWs.5.The determination of manufacturerimpacts, including the effects of manufacturer tax creditsand competitive concerns.6.The determination ofenvironmental impacts.7.The newly proposed energyconservation standards.*Typically, vertical-axis clothes washers are accessedfrom the top (“top-loaders”), while horizontalaxis clothes washers areaccessed from the front (“front-loaders”).11NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisThe SNOPR analyses consist ofrevisions to the NOPR analyses.Purpose•To characterize manufacturer cost-efficiency relationships for higher efficiency equipment.•To evaluate design options that improve efficiency relative to the baseline units.•Sensitivity analysis to lookat current material prices.Product classes analyzed•Two CCW equipment classes were analyzed.Efficiency-level approach•For the NOPR, industry suppliedcost-efficiency data for twoefficiency levels above thebaseline.•DOE analytically supplemented andvalidated this data to extend the cost-efficiency curvesover all efficiency levelsfor both equipment classes.•For the SNOPR, DOE revisedthe top-loader max-tech efficiency level and updated theanalysis to $2008.Engineering AnalysisEngineering Analysis1213Equipment Classes: BackgroundWhen evaluating and establishing energy conservation standards, DOE dividescovered products or equipment intoclasses by (42 U.S.C. 6295(q); 6316(a)):•Type of energy used;•Capacity;•Other performance-related features that affect consumer utility and efficiency.For the ANOPR, CCWs were analyzedas a single equipment class based onEPACT 2005.•EPACT 2005 only mentions oneequipment class, though DOE hasthe authority to add classesas it sees fit.For the NOPR, the equipment classes weresplit into top-loading and front-loadingdue to several factors:•Comments from some interested parties regarding consumerutility (In particular, preservation ofconsumer utility per EPCA).•Precedents set by multiple residential clothes washer rulemakings.•The California Energy Commission(CEC) Petition for Waiver denial.Engineering Analysis14CEC PetitionOn September 13, 2005, theCEC submitted a petition toDOE for exemption fromfederal preemption of California’s waterconservation standards for residentialclothes washers.•There are currently no Federalstandards in effect forresidential clothes washer water use. EISA2007 added a 9.5 WF standardthat will become effective January 1, 2011.•The California Code of Regulations would have an 8.5 WF standard effective January 1, 2007 anda 6.0 WF standard effective January 1, 2010.•The standards for front- loaders arethe same as those for top-loaders in both Federal andCalifornia regulations.On December 28, 2006, DOE denied the CEC petition for three separate andindependent reasons.1. DOE did not have the statutoryauthority to issue a final rulethat would becomeeffective byJanuary 1, 2007 – a threeyear minimum is required.2. DOE determined that CEC did not establish unusual and compelling water interests, which isrequired by EPCA for DOE to grant a waiver.3. The standards would likely result in the unavailability oftop-loaders in California, whichwould violate EPCA.The 9thCircuit Court of Appeals recently reversed DOE’s denial and remanded thepetition for further proceedings. Because this opinion was filed October 28, 2009,it occurred too late to be considered in the SNOPR analyses.Engineering Analysis15Equipment Classes Proposed in the SNOPRFor the SNOPR, DOE tentatively concluded that top-loading, vertical-axis CCWsprovide unique utility and maintained that the axis of access is a feature pursuantto EPCA.DOE retained the two equipment classes from the NOPR:•Top-loading•Front-loadingDOE is willing to reconsider its previous conclusions as part of this rulemaking.•If a single equipment class wereto be established, DOE would give considerableweight to the potential adverse effects of a single standard on competition in theCCW market.•DOE does not intend to set a standard that would produce significant adverseimpacts on competition.Engineering Analysis16Equipment Classes (Issue #1)Engineering AnalysisDOE invites comments on whether the method of “loading” clotheswashers, or any other characteristic commonly associated withtraditional “top-loading” or “front-loading” clothes washers [such aspresence or absence of agitators, ability to interrupt cycles, and possiblyothers] are “features” within the meaning of 42 U.S.C. 6295(o)(4) in EPCAand whether the availability of such feature(s) would likely be affected byeliminating the separate classes for these equipment types previouslyestablished by DOE.DOE also seeks comments as to whether, as a consequence of marketand technology developments, it should maintain the same equipmentclasses for commercial clothes washers as it does for residential clotheswashers.17Efficiency Levels: Max-Tech Top-LoadingThe max-tech efficiency level defined for the NOPR for top-loading CCWs —•Was based upon the unit with the maximum available ModifiedEnergy Factor (MEF) in theCEC equipment database.•DOE proposed setting the standard at the max-tech top-load efficiency level .At the NOPR meeting, Alliance LaundrySystems stated that it had purchasedand tested a max-tech top-loader which did not achieve rated performance andthat there were numerous inconsistencies in the efficiency labeling of the unit.DOE subsequently tested a sample ofthree identical max-tech units at anindependent laboratory•Actual performance (1.63 MEF/8.4 WF vs. 1.76 MEF/8.3 WF) did not match ratedperformance.•Even at this lower level, the unit identified as the max-tech top-loading CCW model for theNOPR continues to be the max-tech unit for the SNOPR.For the SNOPR, DOE has revised the max-tech efficiency level for top-loadingCCWs.•The revised level represents what DOE believes the max-techCCW can actually achieve,given the tolerances and repeatability of the test procedure.•This new max-tech efficiency level is the same as the next lowerefficiency level (EL 2) in theNOPR.Engineering Analysis18Revised Efficiency Levels (Issue #2)Engineering AnalysisDOE invites comments on the revisedefficiency levels, including therevised max-tech level for top-loading CCWs.Efficiency LevelMEF/WFTop-LoadingFront-LoadingBaseline1.26/9.51.72/8.011.42/9.51.80/7.521.60/8.5 (max-tech)2.00/5.53 -- 2.20/5.14 -- 2.35/4.419Technological Feasibility (Issue #3)Engineering AnalysisDOE invites comments on the technological feasibility of the proposedmax-tech CCW, including washing and rinsing performance measures forCCWs and population data for water heating CCWs.The max-tech top-loader CCW has the following features:•Currently marketed only toon-premise laundry facilities•Based on a standard vertical-axis residential platform with an agitator•Four manually-set water levels(most CCWs have three or less)•Five wash programs (most CCWs have three)•Low wash water temperatures (~71°F “Warm”, 108°F “Hot”)•Spray rinse•No observed proprietary technologiesMarket acceptance, which depends onwash performance, is unknown.Suitability for non-institutional use is also unknown.DOE also received comments that front-loading CCWs with electric heaters,used in some parts of the northern United States, would not meet theproposed front-loading standards.Request for Additional Comments20DOE invites comments on any other issues pertaining to the EngineeringAnalysis.Engineering Analysis21NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysisEnergy Use Characterization•To develop energy and water consumption savings estimates for selectedequipment efficiency levels.Markups for Equipment Price Determination•To characterize the channels for howequipment is distributed from themanufacturer to the customer.•To determine prices paid by customersbased on manufacturer selling pricesfor baseline and higherefficiency equipment.Life-Cycle Cost and Payback Period Analyses•To develop the customer life-cycle cost savings and payback period for higherefficiency equipment.Purpose2223ApproachBased on per-cycle energy and water use multiplied by the cyclesper year.Number of cycles per day based on various studies.•Multi-Family: Average = 3.4; Range = 1 to 10.9.•Laundromats: Average = 6; Range = 3 to 8.Energy Use Characterization24Distribution Channels, Inputs and ResultsMarkups to Determine Equipment PriceAccording to data from the Consortium for Energy Efficiency, theoverwhelming majority of equipment issold through distributors or routeoperators.•Laundromats generally purchase equipment through distributors.•Multi-family housing and large institutions generally lease equipment through routeoperatorsBased markup calculations only on the distribution channel involvingdistributors.•Assumed resulting equipment prices would be representative ofprices paid byconsumers acquiring equipmentfrom route operators.Overall baseline markup = 1.93; overall incremental markup = 1.59ManufacturerDistributorLaundromatRoute OperatorMulti-FamilyHousing25LCC equals consumer price plus the sum of operating costs discountedto a particular base year.Economic evaluation from the customer perspective.Analysis implemented in an Excel®spreadsheet combined with CrystalBall®.Analysis models the uncertainty and variability of inputs using MonteCarlo simulation and probability distributions.Results are expressed as LCC savings(baseline minus standard level).Simple payback period (in years) is also calculated and reported in thisanalysis.Life-Cycle Cost and Payback Period AnalysesApproachCombine Changesin CostsLCC ResultsInstalled Cost(Customer Price + Installation Cost)Operating ExpensesConvertto PresentValue26Life-Cycle Cost and Payback Period AnalysesElectricity Prices•Based on the Energy Information Administration (EIA) Form 861 Data.•Developed for 13 Regions: 9 Census Divisions and 4 Large States.Natural Gas Prices•Based on data from EIA’sNatural Gas Monthly.•Developed for 13 Regions: 9 Census Divisions and 4 Large States.Water and Wastewater Prices•Based on data from Raftelis Consultants and American Water WorksAssociation (AWWA).•Developed for 4 Census Regions due to data limitations.Energy Price Forecasts•Based on 2009 Annual Energy Outlook.Water and Wastewater Price Forecasts•Projections from 1970-2008 based on CPI national water price index (U.S. cityaverage).•Price projections to 2043 based onaverage growth rate from 1970-2008.Energy and Water Prices27Installation, Repair and Maintenance Costs;Discount Rates and Equipment LifetimeLife-Cycle Cost and Payback Period AnalysesInstallation Cost•Base cost = $190 based on RS MeansRepair and Maintenance Cost•Annualized cost a function of 1⁄2 consumerequipment price divided by equipmentlifetime.Discount Rates•Based on the finance cost of raising funds to purchase appliances.– Financial cost of any debtincurred to purchase equipment.– Opportunity cost of any equity used to purchase equipment.•Calculated from the weighted-average cost of capital to the firm (WACC) to obtainequity and debt financing.•Weighted-average real value = 5.7%.Equipment Lifetime•Based on various sources includingAppliancemagazine and past DOE TSDs.– Minimum = 7 (Multi-Family), 5 (Laundromat)– Average = 11.3 (Multi-Family), 7.1 (Laundromat)– Maximum = 15.5 (Multi-Family), 9.3 (Laundromat)•All equipment lifetimes characterized with Weibull distribution.Equipment Assignment in the Base CaseTop-LoadingFront-LoadingLevel MEF WF Market Share* Level MEF WF Market Share*Baseline 1.26 9.50 64.8% Baseline 1.72 8.00 3.5%1 1.42 9.50 33.8%1 1.80 7.50 0.0%2 1.60 8.50 1.4%2 2.00 5.50 73.7%3 2.20 5.10 22.8%4 2.35 4.40 0.0%* Based on distribution of models reported in CEC database.Life-Cycle Cost and Payback Period Analyses28Avoids overstating the benefits fromincreasing equipment efficiency by showingthe percentage of consumers already purchasing efficient equipment.29Life-Cycle Cost Analysis ResultsAverage LCC Savings vs. Installed CostMulti-Family Application($25)$0$25$50$75$100$125$150$175$200$225$700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500Installed Cost

Average LCC SavingsBaselineLevel 1Level 2Level 3Level 4BaselineLevel 1Level 2Top-LoadingFront-LoadingRequest for Additional Comments30Public CommentDOE invites comments on any other issues pertaining to the EnergyUse, Markups, and Life-Cycle Cost and Payback Period Analyses.31NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis32PurposeShipments Analysis•To estimate commercial clotheswasher shipments over time.National Impact Analysis•To estimate the NationalEnergy Savings (NES) from commercial clotheswasher energy conservation standardsat different efficiency levels.•To estimate the national economic impact on the nation (or the Net PresentValue (NPV)) from commercial clothes washer energy conservationstandards at different efficiency levels.Shipments Analysis33ApproachShipments AnalysisEstimate base-case shipments forecasts (2013–2043)•Develop a shipments model thataccounts for shipments to:– New construction: New housing construction forecasts multiplied by historical rates of equipmentownership.– Replacements: Equipment retirement functions (equipment lifetimes) applied to equipment stock.•Historical shipments used to calibrate shipments model.– Non-replacements (retired units not replaced).Estimate standards-case shipments forecasts (2013–2043)•Developed with same data as used to estimatebase-case forecasts.•Accounts for purchase price and operating cost changes due to standards bydeveloping a ‘relative’price elasticity of demand.– Elasticity developed from historical price, efficiency, and shipments data for residential appliances.– Purchase price effects dominate.•Cross price elasticity describingthe interactions between top-loading and front-loading washerpurchases due to priceincreases not considered.•Shipments forecasted todrop due to standardsbut consumers areforecasted to beless sensitive toinitial changes in purchaseprice based on consumer automobile purchase decisions.– Consumers forgoing the purchase of new washers assumed to purchase used machines.– Cross price elasticity describing the interaction of used and new purchases not considered.34Standards-Case Shipments Impacts (Issue #4)Shipments AnalysisDOE invites comments on the following aspects of its method to estimate shipmentsimpacts due to standards:(1) Because purchase price and efficiency datafor residential appliances were used todevelop the short-run price elasticityof demand, DOE seeks comment on howapplicable the price elasticity is to the commercial clothes washing market.(2) Because estimates of thelong-run price elasticity of demand were derived fromconsumer automobile purchase decisions,DOE seeks comment on whether it can beinferred that the initial CCW price elasticity of demand would become more inelasticover time.(3) Because a cross price elasticity of demand between top-loading and front-loadingCCWs could not be developed due to the lack of specific data, DOE seeks commentand data on the price interactions betweenthe two types of CCWs, especially underthose circumstances where the purchaseprice increase for one CCW equipmentclass is more significant than for the other.(4) Because DOE is concerned over its assumption that consumers forgoing a toploader CCW purchase due to a price increase caused by standards would insteadacquire used top-loading washers, DOE seeks comments and input on theinteractions between the used CCW market and the new front-loading CCW market.35ResultsShipments Analysis ResultsTop-Loading WashersFront-Loading WashersExample Standard Level= 1.60 MEF, 8.5 WFExample Standard Level = 2.00 MEF, 5.5 WF0.000.020.040.060.080.100.120.140.160.180.201985 1995 2005 2015 2025 2035Year

Shipments (million)Base CaseStandards Case0.000.010.020.030.040.050.060.070.080.091985 1995 2005 2015 2025 2035Year

Shipments (million)Base CaseStandards CaseNational energy savingscalculated from 2013-2043.National NPV calculatedfor equipment shipments entering the building stock from 2013-2043.Base case incorporatesthe penetration of higher efficiency equipment.Standards “roll up” inefficient equipment but do notaffect efficient equipment.ApproachNational Impact Analysis36Once a standard is in place, old equipment goes outof the inventory according to the base-caseefficiency mix. New equipment is sold to replace equipment according tothe new efficiency mix.Use national average equipment prices, annual energy use, energy prices, annual repair andmaintenance expenditures from LCC analysis. Streams of energyuse and total costs calculatedover analysis time periods andcosts discounted to the present.Front-Loading WashersCSL TSLEfficienciesMarket SharesBaseCaseTrial Standard LevelMEF WF12345Baseline- 1.72 83.5%- - - - -111.8 7.5 0.0% 3.5%- - - -2 2, 3 2 5.5 73.7% 73.7% 77.2% 77.2% --34 2.2 5.1 22.8% 22.8% 22.8% 22.8% 100% -45 2.35 4.4 0.0% 0.0% 0.0% 0.0% 0.0% 100%SWEF (MEF)*2.04 2.04 2.05 2.05 2.2 2.35SWEF (WF)5.5 5.48 5.41 5.41 5.1 4.4* Shipment-weighted efficiency (SWEF) , expressed in terms of MEF37NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis38Purpose•To develop a list of standardlevels from which impacts areweighed and aproposed standardlevel is selected.– Each trial standard levelconsists of a set of potential minimum efficiency levels coveringall equipment classes, and may vary between equipment classes; and– SNOPR analyses assess impacts for trialstandard levels (notequipment classes).Method•Trial standard levels are assembled from theequipment classes identified in the SNOPR.– Each trial standard levelconsists of the standard levelsfrom each equipment class thatmeets a certain set of criteria.TSL 1: First standard levelfrom each equipment class representing least significantdesign change.TSL 2: Standard levels foreach equipment class thatstill represent a significantshare of the market.TSL 3: Standard levels thatminimize the equipment price differencebetween thetwo equipment classes.TSL 4: Increments standardlevel for front-loaders; Standard level for top-loadersunchanged from TSL 3 (already at max-tech level).TSL 5: Max-tech level from each equipment class.Trial Standard LevelsSelection of Trial Standard Levels39Trial Standard LevelsTrial Standard Levels for the SNOPRCommercial Clothes WashersTrial Standard LevelsTSL 1 TSL 2 TSL 3 TSL 4 TSL 5Top-LoadingMEF1.421.421.601.60 1.60WF9.59.58.58.58.5Front-LoadingMEF1.802.002.002.20 2.35WF7.55.55.55.14.4TSLs 1 through 5 provide a positive NPV ranging from $0.01billion to $0.51 billion at 7-percent discount rate.40NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis41Consumer Subgroup AnalysisConsumer Subgroup AnalysisPurpose•To evaluate the economic impacts of standards on consumer subgroups who may bedisproportionately impacted compared with thegeneral user population.Method•DOE identified small businessesand consumers without municipal water and sewer that couldbe disproportionately affected,and examined the impact ofproposed standards on this them.•DOE used the LCC spreadsheet model to determine the impact onthese subgroups.Output•LCC savings and simple payback period (in years) forthe identified customer subgroups.•Determined that the subgroups were not disproportionately impacted by the standard.42NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis43Manufacturer Impact AnalysisManufacturer Impact AnalysisPurpose•To assess the impacts ofstandards on commercial clothes washer manufacturers;•To identify and estimate impacts on manufacturer subgroups that may be more severelyimpacted than the industry as a whole;•One “Low-Volume Manufacturer” (LVM) isfocused on thecommercial laundrybusiness and has much lower revenues than its larger competitors in the commercialclothes washer market.•To examine the impact of cumulativeregulatory burdenson the industry.Method•Analyze industry cash flowand net present value throughuse of the GovernmentRegulatory ImpactModel (GRIM); and•Interview manufacturers torefine inputs to the GRIM,develop subgroupanalyses, andaddress qualitative issues.•For the SNOPR, the GRIM was updated for a 2009 base year, with the results expressed in$2008.•The SNOPR MIA also considered the impacts of manufacturer tax credits.44Manufacturer Impact Analysis ProcessManufacturer Impact AnalysisThe MIA consists of three phases:IndustryprofileDevelopstraw-manGRIM*DevelopinterviewguideInterviews&industrywide /subgroupanalysesAssess directemployment,competition,cumulativeburdenFinalizeMIA resultsPhase 2* Government Regulatory Impact Model (GRIM)Phase 3Phase 145Updated INPV Results by TSLChange in INPV analyzed for two scenarios:•Preservation of Gross MarginPercentage Markup with Base-Case Shipments•Preservation of Gross Margin Percentage Markup with Price Elasticity of DemandShipmentsManufacturer Impact AnalysisTrial Standard LevelsBase Case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5Preservation of Gross Margin Percentage Markup with Base-Case ShipmentsINPV (2008$ million)626563575441Change in INPV(2008$ million—41(5)(8)(20)Change in INPV (%)—5.97% 2.24% -7.81% -12.73% -33.09%Preservation of Gross Margin Percentage Markup with Price Elasticity of Demand ShipmentsINPV (2008$ million)626462555139Change in INPV(2008$ million—2.80.5 (7.0) (10.2) (23.0)Change in INPV (%)— 4.50% 0.76% -11.39% -16.57% -37.30%46Manufacturer Production Tax CreditsThe Energy Improvement and Extension Act (EIEA 2008) provides credits tomanufacturers of qualifying equipment.•Manufacturers qualify for a $150 credit for each CCW that has a minimum 2.0 MEFand maximum 8.0 WF.•Manufacturers qualify for a $250 credit for each CCW that has a minimum 2.2 MEFand maximum 4.5 WF.•Qualifying washers must be produced in the United States.•Manufacturers also mustincrease production of qualifying washers to earn thecredit. The EIEA tax credits are only earned on qualifying washers that exceed theaverage number of qualifying washers produced by the manufacturer over theprevious two years.Manufacturer Impact Analysis47Manufacturer Production Tax Credits - ContinuedIn its analysis, DOE found that the EIEA2008 tax credits do not greatly mitigatethe negative industry impacts.•The LVM is the only manufacturerthat produces qualifying CCWs.•Most of the potential benefit from the EIEA 2008 tax credits occur outside theanalysis period.• Manufacturers are eligible for thesetax credits in 2008, 2009, and 2010.• The base year in the MIA is 2009.•The LVM did qualify for a substantial benefitin 2008 ($2.4 million). However, sincethen it has not increased the production ofqualifying washers tocontinue to receivea large production tax credit from the program.• DOE estimated that the LVM will collect a total of $385,000 in production taxcredits in 2009 and 2010.• Thus, the total income from producer taxcredits for the LVM is projected to beabout $2.8 million.Manufacturer Impact Analysis48Manufacturer Impact AnalysisDepartment of Justice ReviewThe DOJ review of the TSL proposed in the NOPR (1.76 MEF/8.3 WF) stated:“... it appears that meeting the proposed standards may require substantialinvestment in the development of new technology that some suppliers of toploading CCWs may not find it economicalto make. CCWs are used primarilyin multi-housing laundries, withtop loading machines accounting forapproximately 80 percent of machines inthese locations. The remaining 20percent are front loading machines, which are more energy efficient butsignificantly more expensive than top loading models. There are only threemanufacturers of top loading CCWs sellingin the United States. It appearsthat there is a real risk that one ormore of these manufacturers cannot meetthe proposed standard. In such acase, CCW purchasers would have fewercompetitive alternatives for top loading machines, potentially resulting inpurchasers facing higher prices from the remaining top loading manufactureror manufacturers.... To maintain competition, the Department of Energy should considerkeeping the existing standard in place for top loading CCWs.”49Manufacturer Impacts (Issue #5)Manufacturer Impact AnalysisDOE invites comments on the determination of manufacturer impacts,including the effects of manufacturer tax credits and competitiveconcerns.50NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis51Purpose•To investigate the effects on utilities from reduced energy sales and peak loaddemand due topotential standards.Method•Use National Energy Savings Results; and•Use the EIA’s National Energy Modeling System (NEMS-BT) tailored for DOE’s BuildingTechnologies Program.Output•Change in electricity and gas sales andprice by region;•Change in the mix of electricity generation; and•Change in installed capacity and generation.– TSLs 1 through 5 resulted invery small installed generation capacityreductions rangingfrom 5 to 12 MW.Utility Impact AnalysisUtility Impact Analysis52NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis53Purpose•To report net jobs created oreliminated nationally as aconsequence of new or amendedenergy conservation standards. Employment impacts include direct and indirect impacts.Method•Uses the Impact of SectorEnergy Technologies (ImSET) model to assess the indirectemployment impacts;•Estimate changes in employment, industry output, and wage income in the overall UnitedStates economy resulting fromchanges in expenditures inthe various sectors of theeconomy;•Estimate changes incosts and benefits using the NIA analysis; and•Direct employment impactsare addressed in the MIA.Output•Change in employment in national economy, other than in the manufacturingsector beingregulated, as a consequence of the amended energyconservation standards.•TSLs 1 through 5 result ina net increase in jobsbut so small that it would be imperceptible innational labor statistics andmight be offset by other, unanticipated effects on employment.Employment Impact AnalysisEmployment Impact Analysis54NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis55Purpose•To report environmental impacts as a consequence ofthe amended energyconservationstandards, including changesin power plant emissions.Method•Use National Energy Savings Results; and•Use the EIA’s National Energy Modeling System (NEMS-BT) tailored for DOE’s BuildingTechnologies Program.Output•Calculated the reductionin power plant emissions of carbon dioxide (CO2), oxides of nitrogen(NOX) and mercury (Hg), usingthe NEMS-BT computer model.•Calculated the reductionin on-site emissions (CO2and NOX) where gas appliances are used(i.e., gas water heatingand drying for commercial clothes washers)•Sulfur dioxide (SO2) emissions were not included due tothe emissions cap set by the CleanAir Act Amendments of1990. Impact on SO2emissions changes was estimated as too smallto affect value of emissions allowances under the cap.•Monetized value of reductions in CO2, NOX, and Hg.•Assessed impact to SO2allowance prices.Environmental AssessmentEnvironmental Assessment56Determination of Environmental Impacts (Issue #6)Environmental AssessmentDOE seeks comment on the determination of the anticipated environmentalimpacts of the supplemental proposedrule, including the methods for valuing theexpected CO2, NOX, and Hg emissions savings due to the proposed standards.57NOPR Analyses Flow DiagramEngineeringAnalysisLife-CycleCost &PaybackPeriodAnalysesNationalImpactAnalysisReviseANOPRAnalysesTrialStandardLevelsConsumerSubgroupAnalysisManufacturerImpactAnalysisUtilityImpactAnalysisEmploymentImpactAnalysisEnvironmentalAssessmentRegulatoryImpactAnalysis58Purpose•To investigate the national impacts due tonon-regulatory alternatives compared withmandatory energy conservation standards.•The non-regulatory alternatives that DOE analyzed include:– No New Regulatory Action;– Consumer Rebates;– Commercial Customer Tax Credits;– Voluntary Energy-Efficiency Targets—ENERGY STAR;– ManufacturerTax Credits;– Early Replacement; and– Bulk Government Purchases.Method•Modify NIA spreadsheet model toconsider the above scenariosand assess their effect onadoption of equipment at the proposedstandard levels.Output•National Energy Savings andNet Present Value of the non-regulatory alternatives.Regulatory Impact AnalysisRegulatory Impact Analysis59Issues for Public CommentSummary of Issues on Which DOE Seeks Comment - SNOPR Issues #1-71.Whether the method of “loading” clothes washers, or any other characteristic commonlyassociated with traditional “top-loading” or “front-loading” clothes washers,are “features” withinthe meaning of 42 U.S.C. 6295(o)(4)in EPCA and whether the availability of such feature(s)would likely be affected byeliminating the separate classes for these equipment typespreviously established by DOE.2.The revised efficiency levels, including therevised max-tech levelfor top-loading CCWs.3.Technological feasibility ofthe proposed max-techCCW, including washing and rinsingperformance measures for CCWs and population data for water heating CCWs.4.The determination of short- and long-run price elasticitiesof demand and cross priceelasticities for top-loadingvs. front-loading CCWs andused vs. front-loading CCWs.5.The determination of manufacturerimpacts, including the effects of manufacturer tax creditsand competitive concerns.6.The determination ofenvironmental impacts.7.The newly proposed energyconservation standards.Request for Additional Comments60Public CommentDOE invites comments on any remaining issues pertaining to thisSNOPR.61How to Submit Comments...Public Meeting– Oral comments will be capturedin the transcript and becomepart of the public record.Written comments– NOPR comment period open until December 9, 2009.Reference docket #: EE–2006–STD–0127 and/or RIN #: 1904–AB49.Email: home_appliance.rulemaking@ee.doe.govMail: Ms. Brenda EdwardsU.S. Department of EnergyBuilding TechnologiesProgram, Mailstop EE–2J1000 Independence Avenue, SW.Washington, DC 20585–0121.Telephone: (202) 586–2945.Courier: Ms. Brenda EdwardsU.S. Department of EnergyBuilding Technologies Program950 L’Enfant Plaza, SW., 6th Floor,Washington, DC 20024.Closing62Backup Slides63Summary of Results For Commercial Clothes WashersCategoryTSL 1TSL 2TSL 3TSL 4TSL 5Primary Energy Saved (quads)0.040.040.100.110.127% Discount Rate0.010.010.030.030.033% Discount Rate0.020.020.060.060.07Primary Water Saved (trillion gallons)0.000.010.140.160.217% Discount Rate0.000.000.040.040.063% Discount Rate0.000.000.080.090.11Generation Capacity Reduction (GW)**0.0050.0050.0100.0110.012NPV (2008$ billion):7% Discount Rate0.010.020.360.410.513% Discount Rate0.080.100.891.031.25Industry Impacts:Industry NPV (2008$ million)4 – 31 – 0 (5) – (7) (8) – (10) (20) – (23)Industry NPV (% Change)6.0 – 4.5 2.2– 0.8 (7.8) – (11.4) (12.7) – (16.6) (33.1) – (37.3)Cumulative Emissions Impacts†:CO2(Mt)2.362.395.075.666.11NOx(kt)1.431.453.043.393.66Hg (t)0 – 0.01 0 – 0.01 0 – 0.03 0 – 0.03 0 – 0.03Wastewater DischargeImpacts (trillion gallons)0.000.010.140.160.2164Summary of Results For Commercial Clothes Washers – ContinuedCategoryTSL 1TSL 2TSL 3TSL 4TSL 5Mean LCC Savings* (2008$):Top-Loading, Multi-Family (8.1) (8.1) 179 179 179Top-Loading, Laundromat (17.7) (17.7) 190 190 190Front-Loading, Multi-Family 4.7 19.5 19.5 91 203Front-Loading, Laundromat 5.2 22.0 22.0 93 216Median PBP (years):Top-Loading, Multi-Family 11.7 11.7 4.6 4.6 4.6Top-Loading, Laundromat 7.9 7.9 2.8 2.8 2.8Front-Loading, Multi-Family 0.0 0.4 0.4 3.0 2.9Front-Loading, Laundromat 0.0 0.2 0.2 1.8 1.6LCC Results:Top-LoadingMulti-FamilyNet Cost (%) 43.3 43.3 13.8 13.8 13.8No Impact (%) 35.3 35.3 1.2 1.2 1.2Net Benefit (%) 21.5 21.5 85.0 85.0 85.0LaundromatNet Cost (%) 51.4 51.4 2.9 2.9 2.9No Impact (%) 35.3 35.3 1.2 1.2 1.2Net Benefit (%) 13.3 13.3 95.9 95.9 95.965CategoryTSL 1TSL 2TSL 3TSL 4TSL 5LCC Results:Front-LoadingMulti-FamilyNet Cost (%) 0.0 0.0 0.0 1.4 1.1No Impact (%) 96.3 96.3 96.3 23.1 0.0Net Benefit (%) 3.7 3.7 3.7 75.5 98.9LaundromatNet Cost (%) 0.0 0.0 0.0 0.0 0.0No Impact (%) 96.3 96.3 96.3 23.1 0.0Net Benefit (%) 3.7 3.7 3.7 76.9 100.0* Parentheses indicate negative (-) values. ForLCCs, a negative value means an increase inLCC by the amount indicated.** Changes in installed generation capacity by 2043 based onAEO 2009Reference Case.†CO2emissions impacts include physical reductions at power plants and at buildings wherethe appliance is being used. NOxemissions impacts include physical reductions at powerplants and at buildings where the appliance is being used.Summary of Results For Commercial Clothes Washers – Continued66Market Characteristics – Commercial Clothes WashersMarket and Technology AssessmentThree manufacturers account for nearly 100% of the domestic marketshare for commercial clothes washers.Source: Consortium for Energy Efficiency (CEE).Commercial, Family-Sized Washers: An Initiative Description of the Consortium for Energy Efficiency. 1998.Major ManufacturersOther ManufacturersAllianceElectroluxWhirlpool/Maytag* ContinentalGELGWascomat* In 2006, Whirlpool and Maytag merged, but have continuedto maintain bothCCW product lines to date.67Screening Analysis MethodScreening AnalysisDesign options screened using the following criteria:•Technological feasibility;•Practicability to manufacture, install and service;•Adverse impacts on equipment utilityor equipment availability; and•Adverse impacts on health or safety.68Technologies Selected for Further ConsiderationScreening AnalysisCommercial Clothes Washers1. Adaptive control systems2. Added insulation3. Advanced agitation concepts for top-loading machines4. Automatic water fill control5. Direct-drive motor6. Front-loading design with recirculation7. Improved fill control8. Improved front-loading-washer drum design9. Improved water extraction to lower remaining moisture content10. Increased motor efficiency11. Low-standby-power electronic controls12. Spray rinse or similar water-reducing rinse technology13. Steam washing14. Thermostatically controlled mixing valves15. Tighter tub tolerance69Downstream Analyses•Life-Cycle Cost andPayback Period•National Impacts•Manufacturer ImpactAnalysisCost – EfficiencyRelationship

Incremental Manufacturing CostMEFEngineering AnalysisCharacterize the relationship betweenmanufacturer cost and efficiency (MEF/WF)Purpose of the Engineering AnalysisCommercial Clothes Washers: Annual Energy and Water UseAnnual Energy & Water Use = Per-Cycle Use x Cycles per yearPer-cycle energy use components•Water-heating•Drying•MachineDrying energy use (RMC) and machine energy use are a function of MEF•Based on residential clothes washer dataNumber of cycles per day•Multi-Family: Average = 3.4; Range = 1 to 10.9•Laundromats: Average = 6; Range = 3 to 8Annual energy and water use of baseline top-loading clothes washer (1.26MEF, 9.50 WF)•Multi-Family– Energy use = 2769kWh/year(1020kWhWH; 1583kWhdrying; 166kWhmachine)– Water use = 331000-gallons/year•Laundromats– Energy use = 4866kWh/year(1793kWhWH; 2782kWhdrying; 291kWhmachine)– Water use = 581000-gallons/yearEnergy Use and Water Use Characterization71Baseline and Incremental MarkupsMarkups to Determine Equipment PriceMarkupsrelate customer price to cost of goods sold (CGS)Baseline markupsrelate price to cost prior to a change in efficiency•Baseline markups indicate a customer price that covers all of a retailer’s ordistributor’s expenses plus profit•Direct labor costs (salaries, payroll, rental and occupancy) are includedIncremental markupsrelate the incremental change in customer priceto the incremental change in CGS•Some costs remain constant with CGS increases•Incremental markups cover only expensesthat vary with CGS – in this case,expenses that increase due to anincrease in equipment efficiency– For example, direct labor costs (salaries, payroll, rental and occupancy) do not vary withefficiency-induced changes in CGS•DOE assumes other operating costs and profit will scale proportionally with CGS72Markups to Determine Equipment PriceResulting MarkupsMarkupBaseline Incr.Manufacturer1.26Retailer--Distributor1.431.18Sales Tax1.069Overall1.931.59Life-Cycle Cost and Payback Period AnalysesLCC Calculation FlowchartTotal InstalledCostFromEngineeringAnalysis(Cost is aFunction ofEfficiency)From Markupsto DetermineEquipmentPriceRepair CostMaintenanceCostAnnualOperatingExpenseLifetimeOperatingExpenseFrom Energy Useand Water UseCharacterization(Energy & WaterUse are a Functionof Efficiency)PaybackPeriodEnergy(and Water)ConsumptionManufacturerMarkupSales TaxRetailer orDistributorMarkupConsumerPriceBaselineManufacturerCostStd-LevelManufacturerCostEnergy(and Water)PricesAnnual Energy(and Water)CostLifetimeDiscount RateEnergy(and Water)Price TrendInstallationCost74National Impact Analysis ProcessShipmentsModelNationalEnergySavingsNationalEconomicImpactsLCCAnalysisResults andOther InputsNationalEnergy Savings(Quads)NationalNet Present Value(2008 US $, billion)National energy savings calculatedfor period from 2013-2043 (30 years)NPV calculated for period from 2013-2062National Impact Analysis75Shipments ModelShipments AnalysisAppliance StockApplianceLifetimeReplacementShipmentsCombinedShipmentsNew BuildingConstructionNew BuildingApplianceSaturationNewConstructionShipmentsHistoricalShipmentsShipmentsDifferenceTotalShipmentsUnits notReplacedRate of NonReplacement(Calibration Variable)Purchase Price and Operating Cost ImpactsShipments AnalysisShipments impacts due to purchase price and operating cost changesare accounted for when forecasting standards case shipmentsShipments Model usedRelative Price(RP) elasticity to estimate theimpacts from purchase price (PP) and the present value of operatingcost (PVOC) changesPurchase price effects dominate but mitigated by household incomeBased on historical shipments, retail price, efficiency, and income datafor home appliances,RPelasticity = -0.34•10% increase inRPresults in a 3.4% drop in shipments•Consumers become less sensitive toinitial changes in purchase price– Based on economic literature,RPelasticity drops 65% in ten yearsIncomePVOCPPRP+=InputsNational Impact AnalysisTotal Installed Cost•Average per unit values as a function of efficiencylevel taken from LCC analysisRepair and Maintenance Costs•No increase in repair and maintenance costs with efficiencyAnnual Energy Use•Average per unit values as a function of efficiencylevel taken from LCC analysisBase-Case and Standards-Case Forecasted Efficiencies•Base-Case efficiencies 2005-2013: Based on base case efficiency distributions from LCC analysis•Standards-Case efficiencies 2013:Based on “Roll-up” scenario•Forecasted efficiencies: Frozen at 2013 levelsEnergy and Water Prices•Average prices taken from LCC analysis•Future energy prices adjusted according to trend forecasted by the2009 Annual Energy Outlook•Future water prices forecasted on linear extrapolation of CPI national water price index from 1970-2008Electricity Site-to-Source Conversion Factors•Conversion factors based onmarginal heat rates fromNEMS corresponding to2008 Annual EnergyOutlook•Factors vary annually and account for generation, distribution, and transmission lossesDiscount Rate•7% and 3% real from OMB’s Regulatory Analysis Guideline A-4Present Year•Future expenses are discounted to the year 2009